CHAMORRO PRESIDENCY THREATENED NICARAGUAN LEADER FEUDING WITH COALITION THAT ELECTED HER

MANAGUA, Nicaragua -- Three years after her stunning election victory, Nicaraguan President Violeta Chamorro's vision of reconciling leftist Sandinistas and right-wing Contras seems more elusive than ever.

In northern Nicaragua, clashes between rearmed former Contra soldiers and the army have resulted in dozens of casualties in recent months. A wave of kidnappings and murders, many politically motivated, is sparking fear and insecurity.

"For the first time in history, people are buying armored cars," said the president's son, Pedro Joaquin Chamorro, sub-director of the newspaper La Prensa. Said Juan Mendez, a peasant in northern Nicaragua: "They say there's peace, but what we have here is war."

The spiraling violence coincides with a highly personal feud between the Chamorro government and the National Opposition Union (UNO) coalition that united to elect her.

Outraged by increasing Sandinista influence in the government, a majority of UNO parties broke with Chamorro earlier this year. The move followed a four-month test of wills in which UNO lost control of the National Assembly to a government-backed coalition made up of the Sandinistas and several UNO renegades.

UNO supporters recently conducted a series of anti-government demonstrations. Among their demands: that Chamorro fire Sandinista army chief Humberto Ortega and her chief minister and son-in-law, Antonio Lacayo.

UNO blames Lacayo for forming a tacit alliance with the Sandinistas, who retain control of the army, police and many important government institutions.

The political feud has further polarized a divided nation.

"What worries me is that no one is making proposals for solutions. Each side is too busy accusing the other," said Francesco Vincenti, U.N. mission chief in Managua.

"The politicians are fighting among themselves while the people suffer," said David Serrano, 28, a driver.

For Nicaraguans such as Serrano, the real concern is the economy.

Two years into an austerity program, Nicaragua's balance sheet is vastly improved. Inflation was down to 4 percent in 1992 from the annual rate of 13,500 percent in 1990. Last year the economy grew slightly for the first time since 1982.

But budget cuts and a recession have left about 60 percent of the population without adequate employment. Poverty levels now rival those of Haiti, long the poorest nation in the hemisphere. Fields vacant only a year ago are now covered with hundreds of dilapidated shacks.

In the countryside, the government has handed out thousands of acres of land to former Contra and Sandinista army soliders. But credit to provide the money necessary to work the land is scarce.

"There is a serious problem of hunger in the countryside that wasn't seen even during the worst years of the war," said Trevor Evans, an economist with the Nicaraguan research institute CRIES.

The credit crunch partly reflects the Bush administration's decision to suspend $104 million in U.S. aid last year over concern about Sandinista influence. Roughly half of the aid has been restored; the rest remains frozen.

On Friday, the U.S. State Department released $50 million in economic assistance that had been suspended for almost a year. In return, the Nicaraguan government assured the United States that Humberto Ortega would step down as commander of the Nicaraguan armed forces in 1995, two years ahead of schedule.

Such problems have taken a toll on what was until recently a Teflon presidency. Once viewed as above the fray, Chamorro is increasingly the target of criticism.

"Violeta said if she won the election everything the Sandinistas robbed would be returned and the army would be eliminated. What has she done?" asked former Chamorro supporter Jose Biagra of Jinotega.

"Violeta is no good. It's time for her to leave," complained Candida Rodriguez of Managua, who also voted for the president.

Still, amid the gloom, there are signs of hope.

For the first time, Nicaraguans enjoy freedom of the press and organization. A new system to settle the claims of those whose property was confiscated under the Sandinistas is finally functioning.

On the labor front, the government might have bought some peace. Privatization accords completed recently have made Sandinista workers owners of a significant share of former state companies.

"Workers are going to be more concerned about producing than protesting," said Sandinista deputy Reynaldo Tefel.

Some say the current pessimism reflects unrealistic expectations about how fast this economically devastated country could be turned around.

"This is the first time in their history that they have tried to institutionalize the democratic process," said Vincenti, the U.N. mission chief. "That would be a challenge in any country. But it's more difficult when there's no historical reference point."